The project will be developed in the Virilla river basin, in Costa Rica, where four thousand
hectares (ha) of reforestation and forest conservation/regeneration will take place. One thousand ha
will be reforested and 3,000 ha of existing forest area will be conserved, 2,000 ha in a natural
primary forest area and 1,000 ha in a secondary forest area. The implementation period will be ten
years in successive and overlapping stages covering the micro-basins in the zone. A 25-year active life
of the project is estimated.

The project will sequester or avoid emissions of carbon (C) through reforestation and forest
conservation activities. The "cumulative effect" or net benefit of this forestry project
is 230,842 metric ton of Carbon (mt C) In addition, it will displace fossil fuel emissions from the
Costa Rican energy system, due to increased output from the several hydroelectric projects located
in the Virilla river basin.

This project is part of the "Private Forestry Project" (PFP), a national scope forestry
project designed to use AIJ foreign investments to compensate farmers for their conservation and
reforestation efforts. The PFP will allow for the expansion of privately held conservation areas,
through expanded and long-term use of the state’s forestry incentives. Under PFP, such
incentives would change from governmental subsidy to a payment for environmental services.

Participants:

The foreign investors are: a Norwegian Consortium (NC) of three companies, Eeg-Henriksen Anlegg
A.S., one of the Norway’s leading construction companies, Kvaerner Energy A.S., a world leader in
production of turbines and ABB Kraft A.S, a Norwegian subsidiary of the multinational company ABB,
producing generators and electrical control systems, and the Royal Norwegian Ministry of Foreign
Affairs (RNMFA), Department of Natural Resources and Environmental Affairs, responsible for Government
financing of AIJ projects.

The host investor is the National Power and Light Company (CNFL), a private enterprise established
to produce and distribute electricity in the San José metropolitan area, both produced by
CNFL and by the Costa Rican Electrical Institute (ICE), the major national utility. CNFL will have
the responsibility for the execution of the project and the Costa Rican Office on Joint
Implementation (OCIC), a host participant, is the authorized office for the promotion of AIJ/JI
policy and activities. OCIC will be responsible to issue, certificate and guarantee the greenhouse
gas (GHG) emissions offsets, known as Certifiable Tradable Offset (CTO), to foreign parties who
invest on AIJ projects in Costa Rica, as proof of the CO2 emissions sequestered or
avoided through their investment.

Foreign Contact:

Function within activity

Project foreign investor

Country

Norway

Contact Person

Bjorn Nordby

Job title

NC Representative

Post Code

Drammensveien 20A

0255 Oslo, Norway

Telephone

+47-22 54 04 00

Fax

+47-22 55 53 30

Function within activity

Foreign investor - AIJ

Country

Norway

Contact Person

Marte Gerhardsen

Job title

Executive officer

Post Code

JuniPlassen/Victoria Terrace

PO Box 8114 Dep., N-0032 Oslo

Telephone

+47-22 24 36 00

Fax

+47-22 24 95 80

Host Contact:

Function within activity

Local investor and developer

Country

Costa Rica

Contact Person

Pablo Cob

Job title

General manager

Post Code

Apartado 10026-1000

San José

Telephone

(506)223 44 33

Fax

(506)221 46 01

Function within activity

Designated national authority on AIJ

Country

Costa Rica

Contact Person

Paulo Manso

Job title

Manager

Post Code

PO Box 7170-1000

Telephone

(506)290 12 83

Fax

(506)290 12 38

E-mail

ocicgm@racsa.co.cr

Description of AIJ project activities:

Type of project:

Forest Preservation, Restoration and Reforestation

Location:

The project is located partially outside the Greater Metropolitan Area of San José, and
will be executed in the upper part of the Virilla river basin, which is located in the Central
Plateau of the country, covering from the source of the river to the point where it merges with
the Tibás river, an extension of 142 km2. Maximum elevation is 2,950 m above
sea level and minimum 1,100 m.

The area is located northeast of the city of San José. The northern boundary is the
Central Volcanic Range Forest Reserve, the eastern boundary the Braulio Carrillo National Park,
the southern boundary includes districts belonging to the Province of San José and the
western boundary is the city of Santo Domingo, in the Heredia Province. This location allows
for the potential to protect the watershed.

Activity starting date:

March, 1997

Expected activity ending date:

The year 2006

Life time of activity if different from the ending date:

Under the Forestry Environmental Services Payment (FESP) program, the legally binding contracts
are for 20 years. However the life horizon of the project has been set for 25 years for
purposes of quantification of benefits, costs and monitoring. Therefore, the project is
expected to end by the year 2022.

Technical data:

Approximately 1,000 ha of pasture will be dedicated to tree plantation, consisting of native
high altitude species to preserve the biological diversity of the area. Since a significant
part of the project is within the buffer zone of Braulio Carrillo National Park, it will be
possible to establish biological corridors along the rivers.

Furthermore, by using native species, it will also be possible to accumulate more information
on their reproduction in plantations.

The incorporation of farms within forest areas or lands to be reforested will take place along
a period of ten years, starting in 1997 with protection of 200 ha of primary forest, 100 ha of
secondary forest and 100 ha of commercial reforestation. According to 1992 data on land-use, in
the upper part of the basin there are 3,617 ha of primary forest and 1,961 ha of secondary
forest. With this project, at least 50% of this area will be protected.

Institutional arrangements:

The project will be developed within the Costa Rica legal and institutional framework of the
Forestry Environmental Services Payment (FESP) program. This program is based on the 1996
Forestry Law, which determines one-third of the 15% sales tax revenue on fossil fuels will be
used to compensate private forest owners for the environmental services provided by forest
protection and plantations. The definition of environmental services includes: the reductions
of GHG emissions, the protection of biodiversity, the protection of aquifers and the scenic
view for tourism attraction. The Law authorizes the Ministry of Environment and Energy (MINAE)
to find international partners to the FESP program, so that the cost of producing global
environmental services, like CO2 reduction, can be shared with the international
community.

To make use of external AIJ investments, the Specific Fund for the Conservation and Development
of Greenhouse Gas Sinks and Deposits, was established by the Executive Decree Nº
25067-MINAE of April 22.

Institutional arrangements:

(continue)

OCIC will be responsible to receive the contributions and disburse these funds to the National
Forestry Financing Fund (FONAFIFO), upon satisfactorily proof of successful sequestration or
avoidance of emissions of CO2 through the FESP program. In addition, OCIC will issue
to foreign AIJ investors the CTOs as proof of the offsets.

The proof of effective sequestration or emissions avoidance can be made anywhere in the
country, as long as it is part of the FESP program that began in October 1995. This mean that
each CTO issued is guarantee against CO2 offsets that has already taken place
through the FESP program. OCIC will document these facts. These CTOs will be transferred by
OCIC to the Norwegian investors in return for their financial contributions to the project.

FONAFIFO will execute the financial administration of the FESP Program by subscribing legally
binding contracts with individual farmers, by means of which they get yearly payments against
proof of effective conservation of forest or reforestation actions.

MINAE through FONAFIFO, committed itself to make available the necessary quota of FESP
contracts for up to 4,000 ha to farmers of the upper Virilla river basin willing to reforest or
conserve forest and to subscribe legally binding contracts with MINAE in this regard.

The CNFL executing unit and MINAE local authorities, will be responsible for the technical
promotion and implementation of the FESP program in the upper Virilla river basin for 1,000 ha
of reforestation and 2,000 ha of natural forest conservation and 1,000 ha of natural forest
regeneration.

The Costa Rica / Norway AIJ Pilot Project was the first international financing of the FESP
program. The FESP program is the financial mechanism of the PFP.

Cost:

a) Explanation of methodology for calculating costdata.

The project has a total cost of US$ 3,395,243. In accordance with the Costa Rican legal framework for
AIJ forestry projects, the investment capital contribution from the Norwegian partners, equivalent to
200,000 mt of carbon, is US$2 million, consisting of US$1.7 million from RNMFA and US$0.3 million
from NC. While the price of a CTO is that determined by OCIC, based on project development and
implementation costs, the average rate of Carbon for this project was US$ 10/mt of C or US$ 2.72/mt
of CO2.

(b) Costa data-Project implementation and AIJ Investment

Project cost (US$)

2,137,092

114,174

114,174

114,947

117,625

169,107

AIJ investment (US$)

2,000,000

US$ / mt CO2:

2.72

2.72

2.72

2.72

2.72

2.72

Monitoring and verification of AIJ project activities and results

As any project using the Costa Rican framework for FESP, FONAFIFO will be responsible for the
monitoring of the reforestation and forest conservation activities.

This project has been designed and will be implemented in a manner that guarantees maximum
transparency and access for qualified analysts and project verification entities during all stages of
project implementation, including full access to project data, methodology and verification of carbon
sequestration and avoidance of emissions resulting from the project.

A monitoring plan using satellite imagery for three-year periods will be put in place. In addition, a
model will be used to analyze the satellite imageries, which compares actual land use with respect to
previous years. Besides remote imagery, ground-verification of the project’s status will also
take place, i.e. to estimate the volume and the rate of growth of the trees, the height and diameter
of random samples will be measured. Monitoring will take place after 1998 to determine the
deforestation rate for each period. This rate should decrease as the project is implemented. OCIC
will certify the amount of carbon sequestered and avoided by the correct execution of the project.

RNMFA will have the right to monitor the execution of the project, and will have full access to
project data, methodology and verification of carbon sequestration and avoidance of emissions. Review
missions will, unless otherwise agreed, be organized every two years during the AIJ Pilot Phase to
evaluate progress made in the project implementation and experience gained of relevance to the AIJ
Pilot Phase. The participants in the review missions will be designated by MINAE, through OCIC, and
RNMFA.

B. Governmental Acceptance, Approval or Endorsement:

(a) In the case of joint reporting, the report is submitted by the designated national authority of one
participating Party with the concurrence of all other participating Parties as evidenced by attached
letters issued by relevant national authorities;

1. For the activity:

Intermediate and joint report: please add copies of letters of endorsement by each designated national
authority of Parties involved in the activity.

As evidenced by the attached letter, this integrated project has been endorsed by the following involved
participants: Costa Rican Ministry of Environment and Energy, the Royal Norwegian Ministry of Foreign
Affairs, the National Power and Light Company of Costa Rica and the Norwegian Consortium, under an
agreement signed on October 26, 1996.

This report is a joint report:

Please find enclosed a copy of the agreement/endorsement by the RNMFA, the Norwegian designated national
authority.

C. Compatibility with supportiveness of national economic development and socio-economic and environment
priorities and strategies:

This project is designed to be fully-integrated and are totally consistent with the goals of the government
of Costa Rica, that is to: augment the country’s renewable energy supply, internalize costs of
environmental services, and sell nontraditional goods and services in which Costa Rica has a natural
comparative advantage, such as the service of cost-effective greenhouse gas emissions reductions.

The Certifiable Tradable Offset (CTO) financing mechanism for the forestry component has been developed, as
the first worldwide of its kind, in order to gain practical experience with such a mechanism explicitly
designed with pilot phase objectives in mind, i.e. to contribute to the information base needed for
evaluations of the pilot phase without preempting its outcome. This mechanism will not only assure that
individual farmers receive compensation for the environmental services that their forest provides, but it
will also assure to AIJ investors that the farmers commitments are legally binding for at least 20 years.
Without AJI funding, it is certain that the FESP program, a component of the new Forestry Law, will not be
applied to this pilot project, along with the environmental, economic and social benefits associated with
it.

This project represents a full integration of public and private participation through the production of
environmental services, such as GHG emissions reductions. In addition, demonstrated that sustainable
development can be good business for all participants and that the CTOs are highly cost-effective and
economically viable in terms of real costs of emissions reduction when subject to mutually beneficial
incentive structures.

D. Benefits derived from the AIJ project:

Do quantitative data exist for evaluation of EB:

Yes. The reductions of carbon dioxide amount a total of 230,842 mt C during the 25 years lifetime
of the forestry actions.

Social Benefits (SB):

The involvement of local small and medium size landowners in forestry activities, through
individuals legally biding contracts, will improve the income and the living conditions for the
residents in the watershed area.

Do quantitative data exist for evaluation of SB:

Yes. With the total US$2 million Norwegian AIJ additional investment, under the FESP program, an
expected additional minimum of 900 private AIJ local partners will be compensated, under the
framework of legally binding contracts, for the environmental services provided by their forestry
efforts, such as conservation and reforestation of a minimum of 10,000 ha of natural and secondary
forest in Costa Rica.

Economical Benefits (EB):

The CNFL’s four hydroelectric plants in the Virilla river basin cascade are highly dependent
upon the hydrological conditions found in the upper river basin, precisely where the forestry
project will have its area of influence. Therefore, the reforestation and forest conservation of
the upper-river portion of the basin will improve the existing hydrological resources and the
quality of the water, increasing the efficiency of the hydroelectric generation. As a result, the
dependence on fossil fuels consumption for electricity generation in the national electric system
will be reduced and the cost of electricity generation will decrease. Furthermore, the provided
scenic beauty will promote ecological tourism attraction in the area.

Do quantitative data exist for evaluation of EB:

Yes. The hydrological regime in the Virilla basin has changed dramatically over the past 20 years,
specially regarding the volume of water and the mean and minimum flow during the dry season. During
the rainy season, the reservoirs experience almost instantaneous point rises in the volume carried
by the river and often leads to a plugging of the conduction systems when large quantities of
sediments are carried, which in turn diminishes the useful capacity of the reservoirs. The maximum
expected benefit of the project for the upper Virilla river basin’s hydrological regime is a
2% of improvement in the annual plant factor.

It can be demonstrated that an effective improvement in the quality of the water can also improve
the generation of power by prolonging the useful life of the equipment and reducing downtime for
maintenance and non-schedule shutdowns caused by excessive solid materials in the water. The
benefits of water quality can be quantified with aid of records, which differentiate shutdowns, by
type. It is estimated that a production capacity may be increased from 5 to 7% through the improved
water quality alone. This statistic is based upon the experience of plant administrators and
operators.

E. Greenhouse gas impacts of the AIJ Project

With this project, the CNFL’s goal of GHG emissions reduction will be realized through the carbon
sequestration due to enhanced biomass growth and carbon storage through forest conservation. The project
will provide a total cumulative greenhouse gas reductions estimated at 230,842 mt C (see next Table). This
estimate was determined based upon the assumption of 25 years life for the project.

For this proposal, the project "cumulative effect" scenario is given by the accumulation of the
annual "project effect". For the primary forest conservation, it was assumed that in the absence
of the project, the current land-use pattern would continue along with decline in carbon stocks. Therefore,
the "project effect" estimation was based upon the emissions avoided by halting deforestation.

The methodology used for the estimation of the biomass was based upon the "Life Zones System",
developed by Holdridge from the Scientific Tropical Center, based in Costa Rica. It permits to map forest
types not only in terms of bioclimate or life zones, but also in terms of local forest and soil ecosystem
type or plant association, within each distinctive life zone.

The carbon was estimated considering a proportion of green biomass/dry biomass of 0.5 and the fraction of
carbon in the dry biomass used was 0.45. This calculation was done by Life Zone system and an average of 67
mt C/ha was obtained. On the other hand, the deforestation rate or risk of change in the use of the land in
the area was estimated in 7.5%-weighted average. This value was obtained based on the Model of the Critical
Areas developed by FUNDECOR. Landsat images from 1986 and 1992 were used to validate the model. Therefore,
considering the area of 2,000 ha to be protected by the project, the avoided emission for the first year,
1997, was 10,050 mt C (=2,000 ha * 0.075 * 67 mt C/ha) and for 1998 , 9,296 mt C (=1,850 ha * 0.075 * 67 mt
C/ha). Thus, the "cumulative effect" of the project or the emissions avoided by the net storage
of Carbon in the protected primary forest during the project life span, 1997 trough 2021, was estimated to
be 41,000 mt C. (see next Table).

To determine the "project effect" or the carbon sequestration in the secondary forest, the
estimation of biomass was based on studies done in Costa Rica by the " Centro Agronómico
Tropical" (CATIE), a worldwide recognized institution that for many years has developed forestry
investigations with native species of the tropics. For the carbon estimate, a proportion of green
biomass/dry biomass of 0.5 was used and the fraction of carbon in the dry biomass used was 0.45. This
calculation was done using the Life Zone Systems and an average of 2 mt C/ha was obtained. The area to be
protected by the project is 1,000 ha and to accomplish this, the annual incorporation of 100 ha will take
place along a period of 10 years, starting in 1997. For 1997, the Carbon sequestered was estimated to be
200 mt C (= 100 ha * 2 mt C/ha). Thus, the "cumulative effect" of the project or the amount of
Carbon sequestered in the secondary forest during the project’s life, 1997 through 2021, was
estimated to be 114,917 mt C. (see next Table).

For the reforestation component, the estimation of biomass was based on studies done by CATIE, the
"Instituto Tecnológico de Costa Rica" and the "Universidad Nacional". To
determine the Carbon sequestration, a green biomass/dry biomass proportion of 0.45 was used and the carbon
fraction in dry biomass used was 0.45. The annual increase rate for the species to be planted was estimated
to be 20 m3 /ha/year and the rotation for the species 25 years. The new plantation to be
established is 1,000 ha, and to accomplish this, an annual incorporation of 100 ha will take place along a
period of 10 years, starting in 1997. For 1999, the Carbon sequestered was estimated to be 405 mt C (= 100
ha * 20 m3 /ha/year * 0.45 * 0.45) and for the year 2000 810 mt C (= 200 ha * 20 m3
/ha-year * 0.45 * 0.45). Thus, the "cumulative effect" of the project or the amount of Carbon
sequestered in the plantations during the project’s life, 1997 through 2021, was estimated to be
74,925 mt of C. (see next Table).

AIJ Pilot Project

Estimated amount ( annual "effect" and "cumulative effect")

of Carbon stored in forest and fixed by plantations

Deforestation (ha)

Emissions Avoided (mtC/year)

Accumulate Hectares

Carbon Sequestration (mt C/year)

Accumulate Hectares

Carbon Sequestration (mt C/year)

Total Carbon with Project

(mt C/year)

1996

2,000

0

0

0

0

0

0

1997

1,850

10,050

100

200

100

0

10,250

1998

1,711

9,296

200

400

200

0

9,696

1999

1,583

8,599

300

600

300

405

9,604

2000

1,464

7,954

400

800

400

810

9,564

2001

1,354

7,358

500

1,000

500

1,215

9,573

2002

1,253

6,806

600

1,200

600

1,620

9,626

2003

1,159

6,295

700

1,400

700

2,025

9,720

2004

1,072

5,823

800

1,600

800

2,430

9,853

2005

992

5,386

900

1,800

900

2,835

10,021

2006

917

4,982

1,000

2,000

1,000

3,240

10,222

2007

848

4,609

1,000

2,000

1,000

3,645

10,254

2008

785

4,263

1,000

2,000

1,000

4,050

10,313

2009

726

3,943

1,000

2,000

1,000

4,050

9,993

2010

671

3,648

1,000

2,000

1,000

4,050

9,698

2011

621

3,374

1,000

2,000

1,000

4,050

9,424

2012

575

3,121

1,000

2,000

1,000

4,050

9,171

2013

531

2,887

1,000

2,000

1,000

4,050

8,937

2014

492

2,670

1,000

2,000

1,000

4,050

8,720

2015

455

2,470

1,000

2,000

1,000

4,050

8,520

2016

421

2,285

1,000

2,000

1,000

4,050

8,335

2017

389

2,113

1,000

2,000

1,000

4,050

8,163

2018

360

1,955

1,000

2,000

1,000

4,050

8,005

2019

333

1,808

1,000

2,000

1,000

4,050

7,858

2020

308

1,673

1,000

2,000

1,000

4,050

7,723

2021

285

1,547

1,000

2,000

1,000

4,050

7,597

Total

114,917

230,842

F. Additionality to the financial obligations of Parties included in Annex II to the Convention,

within the framework of financial mechanism as well as to current Official Development Assistance
flows.

The AIJ funding will be made available by the Norwegian Ministry of Foreign Affairs and the Norwegian
Consortium. The contribution of the RNMFA is provided from a separate budget line, the Norwegian Climate
Fund, which has been established in addition to the Norway’s Development Assistance Budget and will
not be reported as part of Norway’s Official Development Aid (ODA). This contribution is provided in
addition to Norway’s financial commitments under UNFCCC. The contribution from the Norwegian
Consortium is a private sector contribution provided specifically as an AIJ investment. CNFL contribution
is for the project development.

Sources of project funding.

CNFL

1.39

RNMFA

1.7

NC

0.3

As above-mention, the forestry activities will take place under the FESP program. Among the incentives, it
provides an annual payment of about US$ 58/ha/year, against proof of effective conservation of forests or
US$ 48/ha/year for reforestation. These contracts will be legally binding for at least 20 years. On the
other hand, as proof of the CO2 emissions sequestered or avoided through the investment, the
foreign AIJ investors will receive CTOs in return for their financial contributions on AIJ. The rate at
which the CTO is issued to the investors is US$ 10/mt C or US$ 2.72/mt CO2 . Although the
Norwegian AIJ additional investment is part of the project, consistent with Decision 5/CP/1 of the
Conference of the Parties to the UNFCCC, no GHG emissions reductions credits will be claimed by Norway
during the pilot phase. Without the AIJ additional funding, it is certain that the FESP program will not be
applied to this project, along with the environmental, economic and social benefits associated with it.

G. Contribution to capacity building, transfer of environmentally sound technologies, and know-how to
other Parties, particularly developing country Parties, to enable them to implement the provisions of the
Convention. In this process, the developed country Parties shall support the development and enhancement of
endogenous capacities and technologies of developing country Parties.

Because the forestry component involves education and outreach activities, information about proper
silviculture techniques will be passed on to individual farmers and community organizations, contributing
in this way to local know-how capacity building. Furthermore, the implementation of the financial structure
of the AIJ component, as one of the first application of this new legal procedure, will contribute to
develop endogenous capacity in this field. In this way, one of the tenets of Costa Rica’s official
commitment to sustainable development is the use of market oriented initiatives to mitigate climate change.
The designation of CTOs as market instruments designed to attract foreign investments for carbon mitigation
is a cornerstone of this approach. The CTO will function as the financial instrument through which Costa
Rica may fulfill its national priorities of biodiversity conservation, mitigation of climate change,
production of local environmental services, such as protection of aquifers and low-impact ecotourism, and
direct participation of small landholders in all these activities.

H. Additional comments, if any, including any practical experience gained or technical difficulties,
effects, negative impacts or other obstacles encountered

Norwegian comment:

The Government of Norway and the Norwegian Consortium, the investors, found the cooperation with the Costa
Rican side to benefit significantly from the fact that know-how and capacity for AIJ cooperation is in
place.

Costa Rican comment:

In February 1997, the Government of Costa Rica, through OCIC, issued CTOs to Norwegian AIJ investors in
exchange for the first disbursement of US$1 million corresponding to the first tranche of 100,000 mt of C.
In 1997, the final disbursement of US$1 million was channeled to FONAFIFO in exchange for the second
tranche of 100,000 mt of C .

The issued CTOs for the 200,000 mt of C, corresponds to an equivalent amount of carbon "not
emitted" during 1996 and 1997, attributed to private forestry conservation activities financed by the
Government of Costa Rica under the FESP program. Those activities comprise a total of 20,856 ha,
corresponding to 382 legally binding contracts for private forestry conservation in different regions of
the country.

With the total US$2 million AIJ fund, an expected additional 900 private forest landowners will be
compensated, under the framework of legally binding contracts, for the environmental services provided by
their forestry efforts, such as conservation and reforestation of a minimum 10,000 ha of natural and
secondary forest in Costa Rica. During the execution of the FESP program, priority will be given to the
4,000 ha comprising the watershed of the Virilla upper-river basin. Without the AIJ additional funding, it
is certain that the FESP program will not be applied to this project, along with the environmental,
economic and social benefits associated with it.

During the period from 1997 to 1999, the FESP program allows for a total of 203,434 ha under legally
binding contracts conservation in different regions of the country, according different forestry
activities as shown in the following Table. The total investment was US$ 23,976,972.

FESP Program: Area (ha) under legally binding contracts 1997-99

Activity

1997

1998

1999

Area

US$

Area

US$

Area

US$

Area

US$

Conservation

65,316

2,808,588

46,817

4,962,170

54,216

7,239,242

166,349

15,010,000

Management

8,712

601,128

7.667

1,160,819

5,175

1,450,619

21,554

3,212,566

Reforestation

6,873

1,766,361

4,147

1,888,914

4,512

2,098531

15,532

5,754,405

Total

80,901

5,176,077

58,630

8,011,903

63,903

10,788,992

203,434

23,976,972

Concomitantly, according the terms of the bilateral agreement for the Costa Rica / Norway Reforestation and
Forest Conservation AIJ Pilot Project, the commitments stated in section E of this report has been fully
accomplished by Government of Costa Rica (see next Table).

During the period 1996 to 1999, a total of 2,387 ha in the Virilla upper-river basin have been incorporated
to the FESP program. This area corresponds to about 60% of the total 4,000 ha referred by the project
agreement (see next Table).

This AIJ Pilot Project constitutes a groundbreaking precedent of using the CTO financial mechanism, with a
"commodity approach", to clean the atmosphere and, in this way, contributes on the basis of
"learning by doing", to further develop AIJ. Such scheme could be promoted on a global scale as a
financial mean to transfer additional finance resources to developing countries in order to promote the
international effort to abate emissions of greenhouse gases to combat the global warming.